How Much Can Be Disclaimed
Joint tenants and similar co-owners have a built-in feature: when one holder dies, the survivor automatically receives the deceased holder's share. But that automatic transfer is not mandatory. Under this statute, the surviving holder can refuse some or all of the inherited interest. This applies to real estate, bank accounts, and other jointly held property.
On the death of a holder of jointly held property, a surviving holder may disclaim, in whole or in part, the greater of either: 1. A fractional share of the property determined by dividing the number one by the number of joint holders alive immediately before the death of the holder to whose death the disclaimer relates. 2. All of the property except that part of the value of the entire interest attributable to the contribution furnished by the disclaimant.
A.R.S. § 14-10007(A)The statute provides two calculation methods. The survivor can disclaim whichever amount is greater. The first method divides the property equally among the number of holders who were alive just before the death. The second method lets the survivor keep only the portion they contributed and disclaim the rest. This flexibility matters when joint tenants contributed unequal amounts.
When the Disclaimer Takes Effect
A disclaimer under this section takes effect at the moment of the deceased holder's death. The law treats the disclaimed interest as if the surviving holder had died first. That means the disclaimed portion passes to the next beneficiary or heir in line.
This can be a powerful tool for tax planning and estate distribution. For example, a married couple may hold property as community property with right of survivorship. If the surviving spouse disclaims their survivorship interest, the funds could pass to a trust or to the next generation. This may help with a step up in basis or reduce capital gains taxes on the property.
For families dealing with joint tenancy with right of survivorship (JTWROS) property, understanding this option matters. Survivorship in Arizona is automatic, but the right to disclaim gives survivors a way to redirect assets when circumstances change. This flexibility can make a real difference in how property and wealth pass between generations.
Consulting with a qualified professional before disclaiming is important. Once filed, a disclaimer cannot be undone. The decision should account for the full financial picture, including how the disclaimed property will be treated for tax purposes.